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How do the financial impacts of COVID-19 vary by GB region?

Friday, 22 May 2020

By Felicity Rusk

At a GB level, we estimate that the financial disruption as a result of the pandemic has cost producers approximately £28 million across April and May. But how does this vary between the devolved nations?

With almost three-quarters of British dairy producers farming in England, it is not surprising that the financial impact on the English dairy industry is considerably higher than the other devolved nations. However, the number of dairy farmers in each nation vary massively, and dairy businesses in the various nations have been affected in different ways. Therefore, looking at the overall monetary cost for each region only provides a one-dimensional view.

If we focus only on the farmers who have been affected financially, we can chart the average impact per farmer in each country.

We estimate that almost half of dairy businesses in Wales have been ‘highly*’ impacted as a result of COVID-19. Therefore it is not surprising that the financial impact per affected dairy business is higher than the other two respective nations, at £6.1k per farmer.

Meanwhile, the average cost to English dairy farmers is almost a third lower than that of Wales, at £4.1k.

Overall, the financial disruption to the Scottish dairy industry looks comparatively lower than England and Wales. However, if we exclude the 46% of Scottish farmers that have, so far, suffered no financial disruption as a result of the pandemic, the average for the remainder is put at £5.1k per farmer.

What support is available to dairy farmers?

In response to the challenging market conditions, both the English and Welsh Governments have announced funding available to dairy farmers. Furthermore, Governments from all four devolved nations within the UK have come forward to support our new £1 million consumer marketing campaign, Milk Your Moments.

In England, dairy farmers who have lost more than 25% of their income over April and May due to coronavirus disruption will be eligible. They will be entitled to up to £10,000 each, to cover 70% of their lost income during April and May to ensure they can continue to operate and continue production without affecting animal welfare. There is no cap set on the number of farmers who can receive this support or on the total funding available.

The scheme in Wales is very similar. Dairy farmers who have lost more than 25% of their income in April and May will be entitled to up to £10,000, to cover 70% of their lost income. This will ensure they can continue to operate without affecting animal welfare and the environment.

* We have ranked the impact on farmers between high, medium and low based on the following criteria, as well as gaining input from farming unions:

Lost revenue

Cashflow implications

Disruption to their day-to-day operations

For example, a farmer who has been asked voluntarily to curb milk production would be judged as low impact, whereas a net revenue reduction (after taking into account any potential cost savings) of more than 2ppl as a result of coronavirus would be classified as high.